Leveraged ETFs Hit New Highs as Traders Capitalize on Market Swings

This year has been another record setting year for ETF inflows, with over $1.3 trillion coming in.

With the major averages nearing records, that means stocks are often having larger daily swings than in the past.

Massive sudden market moves have led to the rise of leveraged trading funds where Investors try to capitalize on a stock's daily move.

The number of leveraged ETFs reached a record of over 700 in October due to volatile markets and retail investor enthusiasm.

Joining me fresh off ringing the opening bell here at the New York Stock Exchange is Douglas Yonni, CEO of Direction.

Welcome to the show.

Thanks for having me.

It's great to be here.

This is exciting times, right?

I mean, look, first of all, we rang the bell at the New York Stock Exchange.

I don't know.

Is there a cooler experience than that, at least in the financial world?

We're here at the home of ETFs celebrating the Direction lineup of ETFs.

It's been a great year at Direction.

Look, the markets are continuing to go higher.

We're excited.

The market's up today.

You know, we think the Santa Claus rally is real, but more importantly, investors have done really well this year, and so, you know.

Exciting time to close out.

When you look at the markets and the volatility, especially going into the end of the year, what do you think 206 is setting up to look like?

We're pretty excited about 2026.

You know what I would actually say if you look at December, right, the last couple weeks, what we saw the last couple of weeks, that's what we expect for 2026.

So what do I mean by that?

Well, December we started to get some nervousness in the market, right?

Concerns over AI infrastructure spending, CapE.

All of a sudden markets like came down really quickly.

Then it was like, OK, what do earnings look like, you know, the expectation for earnings going into next year for S&P 500 is almost 13% earnings growth.

That's incredible.

People recognize what drives the market, what drives returns of earnings, they're there, they exist.

We're going into a less inflationary environment.

We're seeing the Fed cut rates.

These are all positives.

The expectation is, guess what?

Markets are coming back.

Look at today.

Today, this morning we probably broke a new high on Nasdaq 100.

So all the fears over the last couple of weeks, guess what?

They.

So we think 2026 shapes up to be much like the last few weeks.

What does that mean for you and me?

Generally?

I think we finish next year really excited.

Our long term investments have done well.

However, we're going to have a lot of chop, a lot of volatility, and if you're a short term trader, you like trading the markets, you're nerdy like me, you like getting in there, it's going to be great opportunities for that volatility where you can use some leverage, trade the bears when the market's pulling back, trade the trade the bulls when the market's coming back up again.

Great way to To really try and outperform a little bit here and there.

So you're leaning into a little bit how volatility drives the need for tactical tools.

So just dive in a little bit deeper on that for our audience.

Yeah, so you know the way first of all leverage is important.

If you don't know how to use leverage, come to our website direction.com.

We have a great tutorial.

It's free.

It doesn't take long.

It will tell you, are you right for leverage or not.

If you're not right, then don't trade leverage.

But if you're a leverage trader, 2025 was one of the best years you could have had.

Why?

Well, if you look at the data, every time the S&P 500 dropped by more than 1% a day, the next day's return were the best that we've seen in over a decade.

So what does it mean?

It meant you and I trading some bull leverage on those down days has been incredible in terms of performance rewards.

Buying the dip has worked all year long.

Does it continue?

Hard to say, but if you're a leveraged trader, these volatility moments can be really easy to trade the swings both.

The upside and also to the downside.

That's why at Direction we offer those lineup of ETFs.

We do single stocks, so those that are really into the mag 7 per se, right?

Palantir, some of these companies that are really moving around earnings.

Micron has done exceptionally well over the next last couple of weeks, right?

Our traders have loved the Micron Bull.

It's done exceptionally well.

So if you're a swing trader at the single stock we have it, maybe you like the big indexes, we have those too, whether it's the S&P 500, Technolog technology, semiconductor, Sox that tends to be one of our big ones.

SOXLs, triple leveraged semiconductors, but we even target some of the foreign markets like Korea has done really well this year.

KORU is one of the best performing ETFs out there in the entire market.

Do you have one on K-pop?

We should, we should.

I don't know.

Are there underlying companies that K-pop demon hunters, maybe that would be a great ETF.

You talk about direction weather.

Is that what you're talking about when you think about volatility and coming in and out of the market?

That's exactly right.

Direction weather, you know, for those that are trading that volatility moments.

When you have sharp swings one way or another, those are good opportunities to use leverage because these are reset daily.

So you know, a low, a chop up, chop down, chop up, chop down.

You can't sit in one of these ETFs.

These are not buy and hold ETFs.

But if you're a day trader or you're trading over 23 days a week, some of these momentum sinks have been really powerful and they've been a great way to outperform.

Do you ever get demand from the market and you're responding to that demand, or are you guys kind of leading the way on these leveraged ETFs?

Yeah, it's both.

Sometimes our clients, you know, we, we have like Reddit forums and things where people talk about us.

We try and track that.

We get emails in.

We try and track that as well.

We'll get people reach out and say, Hey, I'm trading this.

Can you build it for me?

So a great example is that we're here ringing the bell for the Titans series.

So what are the Titans?

We had feedback in for the market.

They were saying, Hey, we're trading the sectors, but we really want to trade the sectors.

We don't want to trade 100 names in a sector.

So what we did was we looked at each of the sectors and we said, OK.

The top 5 right by market cap, we'll equal weight them.

We'll put 2x to the bull, 2 x to the bear.

So right now we've rolled out energy.

That's been a that's been a great one.

I think behind us you can see we've got semiconductors, we've got technology, right?

You know what are the sectors people want to trade?

We're giving them the titans and we're building out that series and they've done exceptionally well because look, it's the leaders that are driving the market, right?

We're always talking about the biggest companies, but you don't want the whole market if you're trading trying to.

Trade biotech.

You just want the top five names.

What about commodities gold, silver, as you're looking into 26?

A lot of people talking about this market.

Yes, commodities have been interesting.

So we actually offer an ETFCOM that that has an active manager that will pick and choose and trade commodities.

We're not using leverage per se there.

That is a buy and hold ETF that's done exceptionally well for us.

The other spot though has been gold.

I mean, boy, I think it might have hit a new record even today.

Gold's just been outperforming the overall market.

People love gold.

Well, what's another way to play gold?

What are the companies that surround gold?

They're the miners.

So we offer both a senior and a junior gold miner ETF.

Both of them, you know, last I looked, are among the top 5 best performers of the year across all ETFs.

So a lot of these ETFs, even though they're not meant for buy and hold, they've had tremendous year to date performance.

Talk a little bit about education.

You started right off at the top of the segment saying if you don't know enough about this, come to our website.

How important is it that Get education about these.

There's nothing more important than the education on leverage.

Again, if you're if you're not sure how it works, if you don't know what daily reset means, if you don't know what it means to be 2x or 3x the market's upside or down, it's come to direction.com.

Our team has put together a great little university, and you can go in, you can, you can take a little training, 45 minutes, maybe an hour and a half tops if you're really, really new to this, and you'll you'll know right away is this for me or is this not for me.

This shouldn't be for the majority of your portfolio.

This would be the fun stuff, right?

You know, we've got our core portfolio set.

Great.

What are we doing where we want to trade the markets?

We want to be a little bit more active.

We see what's hot.

We want to trade a little bit in a single stock, put some leverage on.

That's it's the satellite portion.

Awesome.

Congratulations on ringing the bell.

Happy holidays.

Congratulations on all the success that direction is having.

Thanks for having me.

It's a great time to be here and hey, let's close out the market strong.

Thanks, Douglas.